Forage Machinery Costs

Machinery costs for haying operations are a significant portion of total annual costs, with operator labor, fuel, repairs and maintenance, and fixed costs accounting for 35–45 percent of total annual costs. Because of this significant expense, producers should include machinery costs when budgeting for their hay enterprise.

Farm records are the best source of information to develop your costs, but, if adequate farm records are not available, you can calculate estimates using MSU Extension Publication 3543 Farm Machinery Cost Calculations and the accompanying spreadsheet. In this publication, we will use that spreadsheet to calculate machinery costs for a representative set of machines used on a 40-acre mixed-grass hay enterprise with three cuttings per year for an estimated annual yield of 3.25 tons per acre.

Equipment for this representative hay operation includes a 130-horsepower four-wheel-drive tractor, 8-foot mower, 18-foot tedder, 17-foot double hay rake, and medium round baler. Information for the equipment is included in Table 1. The calculations use engineering data from the American Society of Agricultural and Biological Engineers (ASABE) Standards 2011 and 2013 to provide estimates of cost parameters.

The equipment information required for the calculations includes purchase cost, expected useful life, width in feet, annual use in hours, field efficiency, field speed, and field capacity. The annual use for tractors includes use for all enterprises, not just the haying enterprise. The width of the baler is the effective width, or the width that the hay rake pulls into a windrow. In this case, the hay rake is 17 feet wide and pulls hay across 17 feet into a single windrow, so the effective width of the baler is 17 feet. Field efficiency, field speed, and field capacity are estimated using ASABE Standards.

Total annual costs for each piece of equipment, shown in Table 2, are calculated by adding total annual ownership costs, which include depreciation, interest, taxes, insurance, and housing, plus total annual operating costs, which include repairs, fuel, lubricants, and labor. Total annual costs per hour are calculated for each piece of equipment by dividing the total annual costs by the annual use.

Combined costs per hour are calculated for each implement by adding the annual cost per hour for the tractor to the annual cost per hour for each implement. The combined cost per acre is calculated by dividing total cost per hour by the field capacity in acres per hour. The combined cost per ton is calculated by dividing total cost per acre by the expected yield in tons per acre. The combined cost per bale is calculated by dividing total cost per acre by the expected yield in bales per acre.

The costs for this scenario with 40 acres of hay are as follows:

• total annual machinery costs of $12,092
• total annual machinery costs per acre of $305
• total annual machinery costs per ton of $94
• total machinery costs per bale of $56

With direct expenses of fertilizer, herbicide, and other supplies of $57 per ton, the total cost of production of the mixed-grass hay in this example is $151 per ton, which is considerably more than the market price of mixed-grass hay.

This scenario can be used as an example for producers to calculate the machinery costs on their operations. These costs are very sensitive to the number of acres on which the equipment is used, estimated annual use in hours, and purchase cost. Strategies to reduce machinery costs include purchasing used equipment, extending the expected useful life past 10 years, and increasing acres on which the equipment is used.

Publication 3632 (POD-06-21)

By Jeff Johnson, PhD, Extension/Research Professor, Agricultural Economics; Brett Rushing, PhD, Associate Extension/Research Professor, Coastal Plain Experiment Station; Josh Maples, PhD, Assistant Professor, Agricultural Economics; and Daniel Rivera, PhD, Associate Research/Extension Professor, Animal and Dairy Sciences.